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Baker Clark owns a Best Western hotel in Navarre, Fla. and his business has plummeted since the Gulf oil spill. Clark's business interruption insurance doesn't cover environmental disasters, he says.

By Julie Schmit, USA TODAY

Baker Clark is adjusting to a new reality.

Instead of tending to customers, the owner of the 68-room Best Western hotel in Navarre, Fla., is tending to BP claims adjusters.

Clark says his business in May was off 20% from the same month last year because of the oil spill in the Gulf of Mexico, now in its seventh week. His June business is off 50%. Advance bookings for July? "The phones have stopped ringing," he says.

Clark, 59, filed a claim with BP for lost business in May and is awaiting word on how much he'll get. Then he'll gather financial documents to prove a claim for June. So far, the beach outside his hotel is still pristine. Clark has business-interruption insurance, but it doesn't cover environmental disasters, he says. "All I want is to be paid what I should've earned," Clark says. "But my question is, how long will BP pay? This could go on for years."

Thousands of business owners along the Gulf Coast face the same situation as oil washes up in some areas and lingers offshore from Louisiana to Florida. BP, which owns the well that continues to dump oil into the Gulf, has said it'll pay all legitimate claims for spill-related losses and has hired firms to process claims.

But state officials in Louisiana and Florida say the payouts, so far, have been small and often too slow and that BP hasn't given them the data they need to adequately monitor the process. The Obama administration has also stepped up pressure on BP to make the process faster and more transparent, and to make more data available to public officials so they can monitor claims. BP has pledged to speed up payments to businesses by looking at upcoming expenses rather than expenses for a previous month, Tracy Wareing of the Federal Emergency Management Agency said Thursday at a news conference.

"We need more detail and openness from BP to fulfill our oversight responsibilities to the American people and ensure that BP is meeting its commitment to restore the Gulf Coast," Adm. Thad Allen, the Coast Guard commander overseeing the spill response, said in a statement Wednesday after meeting with BP claims officials. More meetings are planned in coming days with state and BP officials, Wareing said Thursday.

Some Gulf claimants say changes can't come soon enough.

Tommy Holmes, 45, owner of Outcast Fishing & Hunting in Pensacola, Fla., got a $5,000 check as a partial payment after walking into a BP claims office in late May. "I said, 'Man. This is going to be nice.' "

Outcast sells fishing gear to commercial and recreational fishermen, as well as hunting and archery equipment. Holmes figures he lost at least $73,000 in May because of fishing closures in the Gulf. Since that first check, Holmes' claim has been handled by three different adjusters, he says. The last one said earlier this week that the claim hadn't been looked at yet, Holmes says.

When Holmes' lawyer, Ned McWilliams, called the adjuster's office, he was the 78th caller on hold. After waiting 45 minutes, McWilliams says, he hung up. When he called back, he was told that Holmes' file lacked the supporting documents that McWilliams says he provided twice before.

"They're clearly disorganized, and they need to double or triple their manpower," McWilliams says.

Ray Chagnard, of Metairie, La., figures he lost $48,000 in revenue last month at his Chag's Fishing and Marine Supply store.

Chagnard says he sent documents in twice that were lost, including three years of personal and business tax returns, monthly sales figures and profit-and-loss statements.

"I'm at five weeks, and I haven't got a dime," Chagnard says, despite claims on BP's website that "reasonable effort" will made to provide interim payments to claimants within 48 hours.

In his last conversation with the adjuster, Chagnard was told to expect a check for $8,800. That represents his lost profit for May but not his lost sales, he says.

Chagnard says that puts him in a tough spot, because his fishing-supply distributors are expecting payment for inventory that Chagnard can't sell, because the spill has squashed the fishing industry. "I can't imagine going through this again next month," Chagnard says.

Long-term outlook

The processing of spill claims may go on for years, especially if claims turn into lawsuits. Claims are still being disputed 21 years after the Exxon Valdez oil spill in Alaska, says insurance litigation expert Mark Bunim with Case Closure. Claims stemming from the Gulf spill are likely to be more numerous, given the Gulf's larger population.

BP says it's moving fast to pay claims. More than 42,000 claims have been filed and 20,000 have received at least partial payment at a cost of more than $53 million, says BP spokesman Jon Pack. No claims have been denied.

BP has opened 25 claims offices in the region and hired risk-management firm ESIS, which is handling claims with Worley Catastrophe Response, based in Hammond, La.

Carpenter says he hasn't heard reports of lost documents. All paperwork is entered into an electronic record so that any adjuster, at any time, can help claimants. "It's more efficient," than having just one adjuster, Carpenter says. He says Worley is handling this catastrophe like others by requiring documentation for economic losses and doing due diligence to "ensure the losses."

The process will get faster, Carpenter says, as adjusters figure out formulas to best capture the impact on different industries. Carpenter expects a "significant" increase in the number of larger businesses getting payments in the next several weeks. "We're rolling out an infrastructure. There may be some delays here and there," Carpenter says. He also says BP's orders to the claims adjusters are to "evaluate claims with information provided and settle to the fullest amount." One claim for $42,000 was recently paid, Carpenter says, and the firm has sent people to companies to help them gather documents, he adds.

BP's Pack also says claims are being paid faster, taking about five days now for fishermen, down from weeks before, Pack says.

Joseph Hutzler, 67, picked up a $5,000 check on Thursday for partial payment for May losses on his six-room Louisiana fishing lodge. The process took two weeks, he says — once he resubmitted information that was lost the first time at the claims office. When getting his check, "They treated me like I owned the place," Hutzler says.

State officials say they need more information to audit BP's process and decisions, and have requested that data.

In the past week, BP started giving Louisiana officials more data than they had been, says Kristy Nichols, secretary of the Louisiana Department of Social Services. The latest data BP provided includes claimants' names, Social Security numbers, the date they filed a claim, the date the claim was paid and its size.

But officials aren't sure they can trust the data. In some cases, the data show claims submitted after they were paid, says Curt Eysink, Louisiana Workforce Commission Executive. There's also no indication of how much money claimants requested. Nichols says that's needed to make sure claims are paid fairly.

"We don't have full visibility as to how they're making decisions," Nichols says. BP's Pack says BP is "happy to continue to work with officials to improve the process."

Of 17,536 Louisiana claims submitted, 47% had not been paid, Louisiana officials said Wednesday. More than 6,000 of the claims were more than a week old; almost 3,000 were more than 3 weeks old, Nichols' office says.

Nichols says there are "many, many businesses on the brink of closure."

Florida officials are voicing similar complaints.

"They're being good about writing these $5,000 checks, but that's about it," says Alex Sink, Florida's chief financial officer. She's suggested the claims process be taken over by the federal government.

Established procedures

The claims process for the BP spill is similar to those deployed by insurance companies after other disasters, such as hurricanes, says environmental law expert Noah Hall at the Wayne State University Law School in Detroit. The difference is that some companies may lose business for years simply because of the stigma of the spill — even if their property, or nearby beach, for instance, was never affected. Such claims will be harder to sort out.

"This isn't simple or easy to do, and it's not obvious which claims are inflated," says Hall, who's represented plaintiffs and companies in environmental claims cases. "The claims being processed now are the most tangible ones," he says. "It'll be the ones down the road that'll get tricky." He also says BP owes it to shareholders to do adequate due diligence to guard against fraud, which was widespread after the Gulf Coast hurricanes in 2005, including Katrina.

If claimants don't agree with what BP says they're owed, they can take BP to court or file for compensation from the federal Oil Spill Liability Trust Fund, says attorney Richard Shore, who worked on the Valdez spill and is an insurance law and asset recovery expert. Funded by oil companies and others, the fund has about $1.6 billion in it. Shore says business owners should also file business interruption insurance claims.

Pursuing payments via lawsuits will take far longer than dealing with BP, says insurance litigation expert Bunim. And some businesses may not be able to wait.

Retailer Chagnard says he paid his June rent of $5,300 with funds from his personal account. If big payments don't come soon, his business, which includes selling fishing and archery gear, may only last until spring 2011, Chagnard estimates. He assessed loans from the Small Business Administration, but it wanted his debt-free house as collateral. His insurance carrier denied his business-interruption claim, Chagnard says. He may appeal.

Mike Voisin of Motivatit Seafoods in Houma, La., which employs about 200 people during the summer peak harvest, feels "comfortable" that he'll get what's owed him for short-term losses. But he hasn't been able to ship seafood to his Nevada distributors for five weeks.

When product does become available, Voisin expects he'll have to discount it to get back in with Nevada distributors.

"There'll probably be more arguing points with claims adjusters over that kind of thing," Voisin says. "What does it cost if you lose your brand?"

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